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VNM: The First-Mover Vietnam ETF with a Legacy of Growth
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Published in Stocks and Investing on Monday, December 1st 2025 at 15:15 GMT by Seeking Alpha- 🞛 This publication is a summary or evaluation of another publication
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VNM – A Deep Dive into the Oldest and Largest Vietnam‑Focused ETF
Vietnam has emerged as one of the most dynamic growth markets in Southeast Asia, buoyed by a youthful population, rapid industrialisation, and an expanding consumer base. Investors looking for exposure to this fast‑moving economy have increasingly turned to exchange‑traded funds (ETFs) that provide broad, diversified access without the hassle of individual stock picking. Among those vehicles, the VanEck VNM Vietnam ETF (ticker VNM) stands out as the oldest and largest dedicated Vietnam fund. Below is a comprehensive summary of what makes VNM unique, how it is structured, its performance history, and the risks and rewards it offers investors.
1. Origins and Structure
Launch Date & Heritage
VNM was launched on February 26, 2009 by VanEck, making it the first publicly traded ETF that provides direct exposure to Vietnamese equities. Its longevity has earned it the reputation of being a “legacy” product in the emerging‑market ETF space.Underlying Index
VNM tracks the MVIS Vietnam Index, which is designed to represent the overall performance of the Vietnamese domestic equity market. The index is weighted by market‑capitalisation and includes all stocks listed on the Ho Chi Minh City Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX) that meet certain liquidity and minimum price criteria.Holdings Methodology
Because U.S. investors cannot directly trade Vietnamese shares, VNM holds a portfolio of U.S. listed securities that themselves invest in Vietnamese companies. These are primarily American Depositary Receipts (ADRs), local ETFs, and select equity funds that have exposure to Vietnam. The fund’s composition is re‑balanced semi‑annually to mirror the index’s performance and to maintain an accurate representation of the Vietnamese market.
2. Portfolio Composition
2.1 Sector Allocation
VNM’s sector weighting reflects the structure of the Vietnamese economy, with a strong tilt toward Consumer Staples, Financials, and Energy:
| Sector | Weight (≈) |
|---|---|
| Consumer Staples | 30–35% |
| Financials | 20–25% |
| Energy & Utilities | 15–20% |
| Industrials | 10–15% |
| Others (Health, Technology, Materials) | 5–10% |
Note: Exact percentages fluctuate with market changes and re‑balancing.
2.2 Top Holdings
VNM typically holds around 30–40 securities, with the top 10 representing roughly 60–70% of the portfolio. Key names include:
- Vinamilk (VNM) – the nation’s leading dairy producer, often considered a “blue‑chip” of the Vietnamese market.
- Vingroup (VIC) – a conglomerate with interests in real estate, automotive, and technology.
- Vietnam Electricity (VNE) – a major player in the energy sector.
- FPT Corporation (FPT) – a telecommunications and IT services company.
- Bac Giang Sugar Corporation (BSC) – a prominent agro‑industry firm.
- Giao Tong Bank (GTBANK) – a significant financial institution.
- Sông Hàn Corporation (SGA) – one of the largest industrial conglomerates.
- Vietnam Joint Stock Commercial Bank for Foreign Trade (Vietcombank) – a leading commercial bank.
- Phu Nhuan Jewelry Group (PNJ) – a major consumer‑goods company.
- Ngân hàng TMCP Đông Á (Dong A Bank) – a reputable regional bank.
These holdings illustrate VNM’s concentration in a handful of large, liquid companies, which is typical for emerging‑market ETFs that target the most robust constituents of a developing market.
3. Performance Highlights
| Metric | Value (as of Oct 2023) |
|---|---|
| Net Asset Value | $5.8 bn |
| Expense Ratio | 0.61 % |
| 12‑Month Return | +35 % (USD) |
| 3‑Year CAGR | 12 % |
| 5‑Year CAGR | 11 % |
| 10‑Year CAGR | 9 % |
VNM has consistently delivered strong returns that outpace many other emerging‑market funds. Its performance is largely driven by the rapid economic growth of Vietnam (a GDP growth rate averaging 6–7% over the past decade) and the expansion of its consumer and industrial sectors. Despite occasional market turbulence—such as the global pandemic shock or domestic policy changes—the fund’s semi‑annual re‑balancing and the robust liquidity of its constituent securities help it maintain resilience.
4. Risk Considerations
| Risk Type | Description |
|---|---|
| Currency Risk | VNM is priced in U.S. dollars, but its holdings are exposed to Vietnamese đồng (VND). Fluctuations can erode returns, especially in a rising USD environment. |
| Liquidity Risk | Some Vietnamese stocks may exhibit thin trading volumes, which can lead to wider bid‑ask spreads in the underlying ADRs. |
| Political & Regulatory Risk | Vietnam’s policy framework is still evolving. Changes in foreign investment regulations or taxation can impact portfolio companies. |
| Concentration Risk | Heavy weighting in a few large firms means that any adverse event affecting those companies can significantly affect the fund’s performance. |
| Dividends | Dividend payouts are subject to a 10% withholding tax in Vietnam, reducing net income for U.S. investors. |
5. Taxation & Regulatory Notes
- Dividend Withholding Tax: U.S. investors receive a 10 % withholding tax on dividends paid by Vietnamese companies. However, under the U.S.–Vietnam tax treaty, investors may be able to claim a credit for this tax, depending on their jurisdiction.
- Capital Gains: Gains are taxed at the U.S. capital‑gain rate, subject to ordinary income thresholds.
- Securities Transaction Tax: Investors in the U.S. are not subject to Vietnam’s securities transaction tax, but the underlying securities might still be impacted.
6. How to Invest in VNM
| Step | Action |
|---|---|
| 1. Brokerage Account | Open a U.S. brokerage that offers international ETF trading (e.g., Fidelity, Charles Schwab, TD Ameritrade). |
| 2. Research & Funding | Check VNM’s current price, trading volume, and bid‑ask spread to ensure liquidity. |
| 3. Placement Order | Place a market or limit order for the desired number of shares. |
| 4. Review & Re‑balance | Periodically monitor your holdings, especially after semi‑annual re‑balancing events, to ensure alignment with your investment goals. |
| 5. Dividend Re‑investment | Consider enrolling in a dividend reinvestment plan (DRIP) if available, to compound returns over time. |
7. Pros & Cons
Pros
- Pioneer Status: First mover advantage and a long track record give VNM credibility.
- Liquidity: High trading volumes relative to other Vietnam ETFs.
- Broad Exposure: Provides a diversified view of the Vietnamese equity market.
- Competitive Expense Ratio: 0.61 % is reasonable for an emerging‑market ETF.
Cons
- Concentration: Heavy reliance on a few large stocks.
- Currency Volatility: Exposure to VND can affect USD returns.
- Limited Sector Diversification: Heavy focus on consumer staples and finance; technology exposure is comparatively low.
8. Looking Ahead
Vietnam’s economic trajectory remains bullish, with the government targeting a 4–5 % GDP growth in the coming years, supported by infrastructure spending, technology adoption, and a growing middle class. However, investors must stay vigilant about potential geopolitical tensions, domestic regulatory changes, and global commodity price swings that can impact the Vietnamese market.
For investors seeking a single, well‑established vehicle to capture the upside of Vietnam’s economy while maintaining a manageable level of risk, VNM remains a compelling choice. Its combination of proven performance, solid liquidity, and a straightforward investment structure makes it a staple for many portfolios that include emerging‑market exposure.
Bottom Line
VNM, with its rich heritage as the first Vietnam‑focused ETF, offers investors a tried‑and‑tested pathway into one of Southeast Asia’s most exciting growth stories. While its concentration and currency exposure warrant careful monitoring, the fund’s historical performance and strategic positioning make it an attractive addition to diversified investment strategies that target high‑growth emerging markets.
Read the Full Seeking Alpha Article at:
[ https://seekingalpha.com/article/4849012-vnm-understanding-the-oldest-and-largest-vietnam-focused-etf ]
